Dive Brief:
- Salvatore Ferragamo SpA reported consolidated revenue of 227 million euros, or about $245 million, down 18.3% year over year for Q1, according to a Thursday release.
- DTC sales dropped 11.1% for the period. Overall performance in the channel was down in January and flat for February and March, per the release. Wholesale declined 38.3% year over year, which the company attributed to a “weak environment and a hard comparison base,” especially in Europe.
- The decline was heaviest in the EMEA region, which posted a Q1 drop of 30.8%. Asia Pacific saw the second largest drop at 19.3% year over year, but the company said that apart from China and Korea, “the Rest of Asia Pacific was positive.”
Dive Insight:
The luxury sector is facing uneven earnings. While companies including Kering and Aeffe, and now Ferragamo, have reported double-digit decreases in the first quarter, competitors including Prada, Hermès and Zegna are posting increases.
In March, Ferragamo reported a 7.6% revenue decline to 1.16 billion euros for its 2023 fiscal year, which the company said at the time was due in part to a softening luxury market, particularly in the second half of the year.
Marco Gobbetti, CEO and general manager of Ferragamo, said the company was continuing to implement a strategy to refresh Ferragamo over recent quarters, offering new products, a new communication model designed to create better brand awareness, and “a redesigned and more efficient customer experience.”
“In combination, these activities have increased brand desirability and as we roll-out the new product offering, this has gained good recognition from across the media and industry,” Gobbetti said in the release. “Over the quarter, our performance was impacted by continued volatility in the Chinese market, as well as a persisting weakness in wholesale and travel retail, further compounded by an unfavorable comparison.”
As the luxury sector “continues to normalize,” Gobbetti said the company was optimistic about the prospect of improved DTC performance in Europe, U.S. and Japan, and it was working to increase its focus on “both customer engagement and communication activities” with regards to its DTC channel.
In North America, Ferragamo saw sales decline 10.9%, although the company said in its release that its DTC trend in the region had improved through Q1, with February broadly flat and March up year over year. Central and South America net sales were down collectively 8.6%, with DTC largely flat and while wholesale in the region was down by double digits. In Japan, there was a 15.7% net sales decrease, although the company said DTC was improving in the region during February and March.
“We continue to invest along our established strategic priorities whilst protecting profitability through our ongoing attention to the quality of our sales and operating capability,” Gobbetti said.
